House Overwhelmingly Passes Postal Reform Bill

For the first time in 35 years, the House of Representatives passed comprehensive legislation last night to overhaul the U.S. Postal Service. After three hours of debate, four amendments were defeated and the bill passed 410-20. Introduced by Rep. John M. McHugh, R-NY, and committee chairman Tom Davis, R-VA, the bill provides a structure to help the USPS achieve future solvency, according to the lawmakers.

"This reform is critical, not only for the continued operation of our nation's postal service, but truly for the millions of individuals and businesses who rely on the availability of universal mail service," McHugh said.

Co-sponsors include Reps. Henry Waxman, D-CA, and Danny Davis, D-IL. Congress last passed legislation to overhaul the postal service in 1970, when President Nixon signed the Postal Reorganization Act. The Senate's postal reform bill (S. 662), which was reported out of committee earlier this year, is not expected to go to the floor for a vote before Congress breaks at the end of this week for its August recess. Both chambers return to work after Labor Day. The House bill still addresses the Civil Service Retirement System, calling for replacing a provision of the Postal Civil Service Retirement System Funding Reform Act of 2003 requiring that money owed to the USPS because of an overpayment into the CSRS fund be held in an escrow account.

On April 8, the USPS filed a request with the Postal Rate Commission for an across-the-board rate increase of 5.4 percent. The postal service said the increase is needed only to meet the escrow requirement of the 2003 act. The Postal Accountability and Enhancement Act eliminates the escrow requirement, which should mitigate the effect of the rate increase. The bill also would return responsibility for funding CSRS pension benefits related to the military service of postal retirees -- a $27 billion obligation -- to the Treasury Department. No other federal agency has to make this payment. The Senate bill also includes these provisions, though no deal has been reached with the White House, which differs on these points.

Reportedly, the White House is offering a possible compromise that could break a stalemate with lawmakers. If a compromise is reached, the new language likely would be added when the Senate considers its version of the measure or in conference committee.

The military pensions and escrow issues have long held up the legislation, which did not reach the floor of either chamber last year despite approval by House and Senate committees. Since the House bill's introduction in January, Danny Davis and McHugh have led a bipartisan effort to resolve concerns raised by the Bush administration, the Senate and other stakeholders. The revised version reflects that input while preserving the bill's major elements. Provisions in the amended legislation include:

* Shifting the basis of the Postal Rate Commission to a modern system designed to ensure that rate increases generally do not exceed the annual change in the Consumer Price Index. This applies only to market-dominant products (letters, periodicals, ad mail) because the postal service is provided with different pricing freedom for its competitive products, such as Express Mail and Priority Mail.

* Combining market mechanisms with commission regulation to govern the rates of competitive products. The USPS would get additional pricing freedom but lose favored legal treatment for such products. * Requiring the USPS to offer only postal services and for the first time defining exactly what constitutes "postal services." The bill also revises USPS authority to regulate competitors.

* Clarifying the authority of the State Department to set international policy, applying customs laws equally to postal and private shipments and giving the postal service the authority to contract with airlines for transport of international mail.

* Giving the PRC "teeth" by granting it subpoena power and a broader scope for regulation and oversight. The PRC would be renamed the Postal Regulatory Commission.

* Mandating several studies, including a comprehensive assessment of the scope and standards for universal service. The bill also supports worksharing and negotiated service agreements.

"What really excites us the most is the embracing of more rate stability, more flexibility in establishing rates through negotiated service agreements," said Bruce Nolop, the company's executive vice

president and chief financial officer at Pitney Bowes. Nolop also is pleased with the rules surrounding work sharing arrangements with "people like us who can help mailers get more efficiencies and reduce their costs."

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